Sam Whelan penned a report on the alliance of four companies managing terminals at the Kwai Tsing terminals in Hong Kong.
Apparently shippers are furious. They believe there will be collusion and rates will rise as a result. Rates are already higher in Hong Kong than the mainland, and the Hong Kong fees add more cost.
The firms say it’s only to make the port more efficient and gain higher throughput. Volume handled has been declining in 2018 compared to the prior year.
It’s true that greater cooperation would most likely improve port throughput. Coordinating yard movements and berth use would offer possibilities for gains. I’m not sure it would have to be at the level of fixing prices. Improving port and yard bottlenecks is an important activity for firms in port management today.
But you can bet shippers will be on their guard for any collusion on pricing, especially when there’s a falling need for services. And since it’s China that is involved– these are Chinese firms– we can’t rule out geopolitical considerations that would be collusive. WE need to watch this one and see how the volumes and prices play out, just like the shippers will.